Wednesday 8 November 2006
In association with The Foundation
Business Strategy: Achieve extraordinary results using business lessons from two of the world’s greatest geniuses
What do the names Einstein and Picasso mean to you? We tend to think of the first as a linear, methodical thinker; and of the second as a wild creative. Yet, according to marketing guru Peter Fisk, their work ethics were remarkably similar. Both men, he argues, applied the "left-brain" faculties of a mathematician and the "right-brain" faculties of an artist to their respective fields.
When Fisk addressed a 250-strong audience of the London Business Forum (LBF) at the British Library Conference Centre, he used a mixture of speech, frenetic movement and inspirational videos. He also frequently threw objects - all consumer goods manufactured by his case-study companies - at those attendees who were willing to play along. These objects included a football, a chocolate cake and a six-pack of soda whose flavour turned out to be "Turkey and Gravy." Such left-field antics ensured the left-brain content of the presentation remained totally absorbing. First, though, Fisk had to introduce the geniuses who inspired his own theories, and explain their relevance.
Einstein, he said, approached problems by hypothesising - imagining complex solutions in broad terms before trying to prove their mathematical basis. He'd often begin this quasi-artistic process by walking in the Swiss Alps. Similarly, Picasso had a highly disciplined craft-education, at variance with the flamboyance of his most famous work. "We think of him as a bit crazy. A madman, a womaniser, a drunkard, all over the place," Fisk said. "But actually if you look at his cubism, it is very scientific... He stood back and thought about the whole picture first, rather than, as many artists before him had done, incrementally putting the picture together."
What does this have to do with business? Well, Fisk suggested, business leaders need to use both hemispheres of their brain on a regular basis too. As many industries have reached a plateau of quality and functionality, with a surplus of products and services, so the ways in which they differentiate themselves have become far more important. If you really want to "think different," he suggested, then you need to connect your "rational and emotional sides," forming a big picture of your industry's future while simultaneously paying attention to the needs of individual customers.
Fisk has clearly tried to satisfy both hemispheres of his own brain during his career. He trained as a nuclear physicist, and spent a year working at CERN's particle accelerator before getting bored and joining British Airways (BA) at the bottom of its sales and marketing ladder. He later rose to lead the development of BA's Executive Club, Club World and Concorde brands. He also helped create a new top-level strategy for BA, to address the emerging challenges of globalisation, low-cost airlines and new travel technologies. Since leaving the company, he has helped many other blue-chips to overhaul their marketing strategies, via PA Consulting Group and his own practice. Today, he is CEO of the Chartered Institute of Marketing.
During his presentation, Fisk praised a variety of companies for their left-brain/right-brain balance. For example, he said, Liberty, the up-market UK department store, famous for its à la mode home furnishings since 1875, demonstrates "how you can look back to great artists [and] designers of the past, and fuse their work with a contemporary style and modern-day fashion, to create something quite unique." By contrast, Genentech, the San Francisco-based biotechnology company founded in 1976, "looked for the small niches of people who really do respond to a certain treatment in a certain way, and specialised in them." Whether it's designer drugs or fabrics, "if you can do something phenomenally different for a tiny group of people, you can be incredibly successful," he concluded.
Such strategies are now more important than ever, Fisk argued. No matter what your industry, you need to develop a better understanding of what your customers want and need - examining every feature of every product and service you offer in detail, to determine which are most valued.
To demonstrate the importance of this process, Fisk related the story of a steel company that he recently advised. This company prided itself on quick deliveries but found it was nevertheless inconveniencing many of its customers. The problem was that it often delivered products an hour or so after they were expected, thereby disrupting complex construction schedules. For these clients, "being on time within a one-hour window was more important than being a day quicker," Fisk explained.
Alongside the detailed self-assessment of capabilities, you also need to give yourself more time and space for big-picture thinking, Fisk advised. Traditionally, he pointed out, companies have invented new products and services and tried to "push" them into new markets, without necessarily considering the likely demand. Today, however, "you can get capabilities easily from anywhere" and therefore need to "think about the opportunity before you think about the capability you need to seize that opportunity."
You can identify potential growth areas simply by paying more attention to customers' behaviour, Fisk argued. Another of his clients, Coca-Cola, traditionally defined itself as a soft drinks company. However, when he analysed the alternative drinks bought by its customers, it was clear that the brand was confining itself to the least attractive part of the overall drinks market. "Things like water, sports drinks and juices, and teas, were far more valuable in terms of growth potential and margins," Fisk revealed. By analysing these market "adjacencies" - product types competing for the time and resources of each drinker - Coca-cola realised it needed to shift its focus.
Fisk advised the LBF attendees to analyse their own markets in the same way: "If you make beer and you sell it off trade, you could sell it on trade," he suggested. "If you sell it in pubs, you could sell it in nightclubs. If you sell it to nightclubs, you could sell it in sports bars. If you actually bottle stuff at the moment, you could start to brew it. If you start to brew it, you could look at packaging in different ways... Mapping the adjacencies one by one shows you what's the easiest move or the least risky move."
Yet diversification alone isn't enough to guarantee sustainable growth. Another priority, Fisk said, is to communicate with your customers increasingly via "pull mechanisms" -that is to say, you can no longer foist new product and service offerings upon them. Rather, you must sell on "the customers' terms," and make sure your marketing "represents the customer rather than you". Already, we've seen the boom of sites on which pricing is defined by customers rather than suppliers, such as eBay. Now we're seeing the rise of on-line networks, based around forums, chat rooms, news groups and social networking sites such as Myspace. These are overturning the traditional CRM systems, through which companies used to try forcing customers into relationships.
Such networks are self-fuelling, Fisk pointed out. Paraphrasing "Metcalfe's Law," one of the operating principles of the Internet, he said: "the power of the network is the square of the nodes, which means every time you get an extra person into the network, it has a multiplication effect in terms of the power or the potential of that overall network." Thus, for example, Huggies and Pampers, the nappy brands, have been able to create "fantastic communities of mums around their products".
Fisk's favourite example of corporate networking was that of Jones Soda, which recently became the number-two soft drinks brand in its native Canada. The founder is a failed Olympic skier whose motto is: "Nobody needs my drinks. Nobody wants my drinks. But they love my drinks." As Fisk explained: "He tried importing drinks from around the world into his native Canada and then selling them, but he got bored with that. He tried squeezing lemons and oranges and selling fresh orange juice, but it was too much of a hassle. So he went to the Internet and he put up a site, and he said: 'I want to create a drinks company. Customers, what do you think I should do?' They came back with 150 flavours. And do you know what the best-selling flavour is of all?... Turkey and gravy." A vital aspect of the Jones network is that all of the labels for its bottles are photographs downloaded by customers to the company website.
Fisk concluded by pointing out that, even with such innovations, a company wishing to grow sustainably needs to go further: "If you look at the most innovative companies around the world," he said, "they're applying innovation to their markets: the ways in which customers apply the products, the channels through which they buy the products; the communications, the business model in which they transact with customers and partners to achieve the solutions for the customers." All these things, he suggested, can make your differentiation efforts more sustainable: "The product is probably the least sustainable bit because as we all know, most products are technology- or feature-based and so they're relatively easy to copy."
Ultimately, he said, if you want to differentiate yourself, you have to raise a toast to the "crazy ones," as Apple Computer famously did in its "Think Different" advertising campaign at the turn of the Millennium. "I think you've got to have the head of Steve Jobs to see things differently," he said. "The whole music industry is in turmoil. There's a crazy little illegal company called Napster, and there's the record industry saying, 'How can we let go of our existing CD formats?' Everybody's wondering what's gonna happen, and Steve Jobs is doing something about it. He's having that vision of how you connect iTunes and iPod together to transform an entire industry."